The local perfume industry has the potential for impressive growth, according to a commerce think tank.
Last year Thailand's perfume market was valued at US$391 million, with an average annual growth rate of 5.86%, said the Trade Policy and Strategy Office (TPSO).
The expanding market presents opportunities for local businesses, including farmers cultivating aromatic plants, according to TPSO.
One factor driving the growth is the popularity of Thai perfume products among local and international customers.
Juthinat Piyaweerawong, founder and chief executive of Meemitmak Co Ltd, a manufacturer of Mith, Proad and Prann perfume brands
Local preferences
Domestic perfume brands gained recognition among local consumers during the pandemic, said Juthinat Piyaweerawong, founder and chief executive of Meemitmak Co Ltd, the manufacturer of Mith, Proad and Prann perfume brands.
He attributed this surge in popularity to travel restrictions, which reduced tourism among Thais who previously purchased perfumes during trips abroad.
In addition, the country's economic challenges have encouraged people to try cheaper, alternative products, said Mr Juthinat.
As a result, more Thais are turning to local perfume brands, realising they offer similar quality as foreign brands, he said.
The growth of the Thai perfume market has attracted the interest of new entrants looking to capitalise, said Mr Juthinat.
Before the pandemic, there were roughly five major local perfume entrepreneurs. He said that number has now doubled.
Furthermore, Thai fragrance brands have started to launch more perfume products.
Thaneth Jiraswakedelok, chief marketing officer and co-founder of Divana, said people ranging in age from teenagers to their 40s are increasingly drawn to perfume products, spending more on products that allow self-expression, which could drive industry growth.
He said more consumers are willing to try new perfume brands, creating opportunities for perfumers with unique identities, such as those representing specific lifestyles or promoting sustainable perfumes.
The local perfume industry has caught the attention of new entrants looking to capitalise.
Catering to tourists
Another factor driving the growth of Thai perfumery is a surging foreign customer base, according to Divana, a Thai luxury spa operator and retailer of aromatherapy products.
Thailand posted a record for foreign holidaymakers in 2019, with 39.9 million international arrivals.
Mr Thaneth said this surge enhanced the visibility of Thai perfume brands, opening up new opportunities for local products and driving market growth.
As more travellers flock to the country, the demand for luxury products continues to rise, he said.
Over the past five years, more foreign luxury perfume brands also entered the Thai market, said Mr Thaneth.
"The Thai perfume industry is now more accessible," he said.
"Entrepreneurs can leverage social media to build brand awareness, and utilise e-commerce platforms for sales."
In the long run, the tourism boom should elevate demand for Thai perfume products, making them more attractive as souvenirs for tourists, said Mr Thaneth.
Display of Mith brand products.
Government support
He proposed the government amplify industry growth by subsidising costs for participation in international trade fairs, enhancing business matching opportunities and promoting the perfume sector as part of the soft power strategy.
Furthermore, Mr Thaneth urged the government to safeguard Thai products and ensure fair trade practices.
While he has not observed a significant influx of Chinese-made perfume products, he said he remains concerned about cross-border e-commerce platforms such as Temu that might facilitate the entry of aromatic products into Thailand without proper regulations.
To support the industry, Mr Juthinat recommends eliminating the excise tax on perfume, which is 8%.
He said Thai manufacturers are already burdened with multiple levies, including import duties, excise tax and value-added tax.
Mr Juthinat said eliminating the excise tax could lead to significant growth, strengthening the competitiveness of Thai brands against foreign brands.
Global expansion
Growing the Thai perfume market via exports is not easy, but Mr Juthinat believes focusing on high-quality production and setting appropriate prices for target markets can foster long-term growth.
"Quality products can create opportunities for partnerships and market expansion," he said.
Thai perfumers looking to export may face stiff competition from established local brands and global players controlling in the market, said Mr Juthinat.
Mr Thaneth advised Thai perfume entrepreneurs to first strengthen their branding domestically, ensuring their products have unique characteristics that are clearly defined.
Marketers can leverage these brand characteristics to engage their target customers effectively, using storytelling techniques to showcase the distinctiveness of local offerings in international markets, he said.
Moreover, exporters must carefully study target markets, understanding customer behaviour in these markets, said Mr Thaneth.
For instance, the Japanese market tends to favour light scents that highlight natural fragrances, while in Europe there is a growing demand for perfumes made from sustainable ingredients, he said.
"Thai entrepreneurs are good at creating storytelling for Thai products," said Mr Thaneth.
In addition, having local partners abroad is vital to rev up growth for Thai brands, he said.
"Thai perfume producers are exceptional. They can create perfumes with deep, gentle and sophisticated scents, which makes them stand out and difficult to replicate," said Mr Thaneth.
He said if local perfumers can establish strong branding for Thai perfume products, collectively it can enhance the reputation of Thai scents on the global stage.